The Bay Area Newspaper Group-East Bay, which operates a number of newspapers including the Contra Costa Times and Oakland Tribune, and the California Media Workers Guild have agreed to an 18-month contract that leaves the door open for wage cuts for journalists in the East Bay as soon as October.

The contract was approved by union members on a 57-2 vote. About 180 workers are covered by the contract. The agreement establishes a minimum wage for journalists of $18.75 an hour, or $39,000 a year.

The deal also allows for wage cuts of unspecified amounts to begin no earlier than Oct. 1, if the company seeks to renegotiate the contract. During meetings in late May, executives with the East Bay newspapers told employees that the company was actively considering wage reductions to reduce expenses.

BANG-East Bay and the Mercury News are both owned by Denver-based MediaNews Group.

Starbucks tip-jar rule upheld

A California appeals court has overturned last year’s $86 million decision against Starbucks, saying the company did not violate state law by allowing shift supervisors to take a cut of the money in tip jars.

Starbucks policy requires baristas to share that money in tip jars with their shift supervisors, who mentor and coach them.

Last year’s ruling by San Diego County Superior Court Judge Patricia Yim Cowett ordered the company to discontinue its tip-pooling policy and pay damages to more than 100,000 Starbucks baristas.

In a ruling filed Tuesday, a three-judge panel with the California Court of Appeal said the law does not prohibit an employer from dividing tips placed in a “collection box” among employees who provided service.

The ruling “validates our long-standing tip policy, which ensures that both baristas and shift leads — the hourly (employees) in every Starbucks store — receive a fair share of the tips,” Starbucks said in a written statement.

David Lowe, an attorney who represents the plaintiffs, said they consider the ruling to be a “temporary setback” and now will look to the Supreme Court of California. “The Court of Appeal clearly erred and misinterpreted the law in reversing the trial court’s decision,” he said.

NATION

Reports show economy struggling

A pair of economic reports Wednesday indicated only slight improvement in the service and manufacturing sectors, suggesting that any economic recovery will be gradual.

The nation’s service sector shrank in May at the slowest pace since late last year. And factory orders rose in April. But the improvements fell short of economists’ expectations.

The Institute for Supply Management said its services index registered 44 in May, up slightly from 43.7 in April. It was the highest reading since October. Service industries such as retailers, financial services, transportation and health care make up about 70 percent of U.S. economic activity.

But the ISM figure marked its eighth straight month of contraction, and it fell slightly below economists’ expectations. Any reading below 50 indicates the services sector is shrinking.

Separately, the government reported that orders to U.S. factories rose 0.7 percent in April, the second increase in three months.

But the Commerce Department’s report fell short of analysts’ expectations. And the government also marked down the March figure to a 1.9 percent drop, from the 0.9 percent decline previously reported.

Court halts Chrysler sale to Fiat

A federal appeals court has halted Chrysler’s sale of the bulk of its assets to Italy’s Fiat pending an appeal by a trio of Indiana state pension and construction funds.

The U.S. Court of Appeals for the Second Circuit said late Tuesday it will hear arguments in the case Friday afternoon in New York, according to the Indiana treasurer’s office. Chrysler had hoped to close the sale by the end of week, pending regulatory approval.

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